Forex Weekly Outlook Nov 28-Dec 3

The US dollar reached new highs against the euro and the yen, but some profit taking was seen amid the Thanksgiving vaction. We are not back to full business: GDP data in the US and Canada, US consumer confidence and a full buildup to the US Non-Farm Payrolls stand out. These are the main events on our calendar. Here is an outlook on the highlights of this week.

US durable goods orders for October revealed a hefty climb in October, surging 4.8% on stronger sales. This was the fourth month of gains out of five, indicating corporate investment is starting to show. The release exceeded forecasts of 1.2% gain. Another encouraging piece of news was the rise in Core orders excluding transportation items, gaining 1.0% after a 0.2% increase in the previous month. This positive release raises hopes that business investment is finally rebounding and is set to improve. Let’s start,

Updates:

Mario Draghi speaks: Monday, 14:00. European Central Bank President Mario Draghi is due to testify on economic and monetary developments following the Brexit vote before the European Parliament’s Economic Committee in Brussels. Draghi noted recently that the ECB will extend its €1.7 trillion bond-purchase program on December, warning that the Eurozone’s weak economy remains clouded by downside risks and heavily reliant on the ECB’s stimulus.

US GDP data: Tuesday, 13:30. After three unimpressive quarters, the US economy rebounded in Q3 and advanced at 2.9% according to the initial report, which came out slightly better than expected. The second release is expected to show a small upgrade to 3% annualized growth. Note that significant revisions are common in the US.

US CB Consumer Confidence: Tuesday, 15:00. Consumer morale declined in October to 98.6 compared to 103.5 posted in the prior month, suggesting households remained cautious amid weaker economic growth and pre-election uncertainty. Economists forecasted a decline to 101.5. Most analysts believe this decline was temporary reflecting the nervousness about the looming presidential election. Nevertheless, consumers continue to spend boosting growth. Analysts forecast a rise in consumer confidence to 101.3.

US ADP Non-Farm Employment Change: Wednesday, 13:15. The ADP jobs report for October continued to disappoint with a smaller than expected release of 147,000 new positions, the weakest figure since April 2013. Construction and education jobs dropped sharply as the overall trend of job gains continues to weaken. However, job growth remains strong but the pace of growth is slowing. ADP report is expected to show a jobs gain of 161,000 in November.

Canadian GDP data: Wednesday, 13:30. The November release showed the Canadian gross domestic product advanced at the slowest pace in three months, rising 0.2% in August compared to 0.4% in July and 0.6% in June. Between August of 2015 and August of 2016, the Canadian GDP has increased a mere 1.3%. Goods-producing industries, the main contributors to GDP, increased by 0.7% from July and fell 0.9% from a year ago. The service sector remained unchanged in August. GDP in Canada is forecasted to rise 0.1% in October.

US Crude Oil Inventories: Wednesday, 15:30. U.S. crude oil stocks declined in the week to Nov. 18 after three straight weeks of gains as imports dropped and refineries hiked output. Crude inventories declined 1.3 million barrels, compared after an increase of 671,000 barrels in the previous week.

US Unemployment Claims: Thursday, 13:30. The number of Americans filing initial claims for unemployment benefits edged up from a 43-year low last week, but remained positive, reflecting a tightening labor market. The number of new claims increased by18,000 to a seasonally adjusted 251,000 while economists expected a gain of 241,000. Claims remained below 300,000 for 90 straight weeks. The four-week moving average of claims fell 2,000 to 251,000 last week. The number of new claims is expected to reach 252,000 this week.

US ISM Manufacturing PMI: Thursday, 15:00. The US ISM manufacturing index gained momentum in October rising to 51.9 from 51.5 in the previous month. The reading was a bit lower than the expectations of 51.7. Production strengthened to 54.6 from 52.8, but orders declined to 52.1 from 55.1. The employment index returned to growth at 52.9 from 49.7 in the previous month and export orders remained in positive territory for the eighth successive month. The ISM manufacturing index is expected to rise further to 52.1 in November.

Canadian Employment data: Friday, 13:30. The Canadian employment market gained 44,000 jobs in October. The increase was entirely due to part-time employment offsetting a loss in full-time positions. The reading was further evidence that Canada is struggling to provide quality, high-paying jobs. The increase in employment was driven by 67,000 additional part-time positions, while full-time jobs plunged by 23,000. The unemployment rate remained steady at 7.0% as more people entered the labor market, looking for work. Analysts expected an overall job loss of 10,000. The Canadian employment market is expected to gain only 100 jobs in November and the unemployment rate is expected to remain at 7%.

US Non-Farm Employment Change and Unemployment rate: Friday, 13:30. The U.S. monthly jobs report showed a smaller than expected jobs gain of 161,000 in October. While the unemployment rate remained unchanged at 4.9%. However, hourly pay increased 10 cents reflecting a 2.8% annualized increase. Analysts believe this is a step in the right direction which will enable the Fed to proceed with their rate hike plans. US job market is expected to create 165,000 in November and the unemployment rate is forecasted to remain at 4.9%.

That’s it for the major events this week. Stay tuned for coverage on specific currencies

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